My wife and I each have Chase Sapphire Reserve cards, and our new annual fees just came due. My previous plan was for my wife to downgrade her card to a no-fee Freedom card, and then I’d pay $75 to add her as an authorized user to my card. Now, though, a new card has made me rethink my plans. Now, I’m wondering: should I keep the Sapphire Reserve card at all?
Last week Amex unveiled their new Gold card which offers eye-catching perks in exchange for its $250 annual fee:
- 4X Membership Rewards at US Restaurants
- 4x Membership Rewards at US Supermarkets on up to $25K per calendar year in purchases (then 1x)
- 3x Membership Rewards for flights booked directly with airlines or on Amextravel.com
- $120 dining credit: $10 per month credit for spend at GrubHub, Seamless, The Cheesecake Factory, Ruth’s Chris Steakhouse, and Participating Shake Shack locations
- $100 Airline Fee Credit
Whether those perks are worth the $250 annual fee depends upon your spend habits. I created an easy way to answer that question for yourself, here: Is 4X worth $250 per year? How much are those Amex Gold 4X categories (grocery & dining) worth?
What if your answer, like mine, to whether the Gold card is worth the $250 annual fee was a resounding “YES“? Does this mean that the Chase Sapphire Reserve card is no longer worth keeping? After all, a big part of the Sapphire Reserve’s value is with its 3X dining benefit. Let’s break down the numbers…
Chase Sapphire Reserve’s valuable benefits
The Sapphire Reserve’s benefits can be found in my Google Doc spreadsheet: Ultra Premium Credit Card Value Worksheet. As a reminder, this worksheet was designed to help you analyze which ultra-premium cards ($400+ per year) are worth the annual fee. Read more about the spreadsheet here: Your turn: Which Ultra Premium Cards are Keepers?
Before the old Premier Rewards Gold card was turned into a gem and renamed to “American Express® Gold Card,” my personal valuation of the Sapphire Reserve card was as follows:
In total, my personal valuation of the card’s benefits came to $650. That’s enough above the card’s $550 annual fee to make the card worth keeping.
Now, though, the Gold card has me rethinking things. While in the United States, my wife and I will no longer use my Sapphire Reserve card at restaurants. Even though I have a slight preference for Ultimate Rewards points over Membership Rewards points, I’ll take 4X Membership Rewards over 3X any day. Still, I would continue to use the Sapphire Reserve card for dining when traveling outside of the US. I’d also use it at hotel restaurants within the US since there’s no guarantee that they’ll code as dining (they may code as lodging). And, I’d want to continue to use the Sapphire Reserve for all travel spend for its 3X rewards, best in class travel insurance, and $300 in annual travel credits.
After accounting for the Amex Gold card, my valuations of the Sapphire Reserve’s benefits changed. The biggest change is that I dropped my valuation of “3X points per dollar for travel and dining” to just $40. Here’s how I came to that number:
- Dining: Going forward I won’t use the Sapphire Reserve for dining within the US at all, but would like to continue using it when outside of the country.
- Travel: I have other cards that offer 3X for all travel purchases (Citi ThankYou Premier and US Bank Altitude Reserve), but I do personally prefer Ultimate Rewards points over ThankYou points or Altitude Reserve points (which are worth 1.5 cents each towards travel).
- Overall, I’d estimate that I spend $15K per year on travel & international dining.
- I arbitrarily assigned a quarter cent value of Ultimate Rewards points over competing points (ThankYou Rewards, for example)
- Taken together: $15K spend x $0.0025 = $37.50. I rounded up to $40.
- This is, admittedly, a conservative valuation. I’m likely to get plenty of additional value through earning 3X rather than 2X when dining outside of the US, but I’d rather error towards a lower value.
The other change I made was to increase my valuation of the Sapphire Reserve card’s travel protections. The Sapphire Reserve really does have the best automatic travel protections available (see: Ultra-Premium Credit Card Travel Insurance). As I considered this, I realized that I have a real world datapoint showing how much I value this: Even though I currently have a consumer Amex Platinum card which offers 5X for airfare, I’ve continued to earn just 3X with my Sapphire Reserve card for airfare in order to ensure that I’d have protection for trip delays, trip cancellation, emergency medical, etc. With Membership Rewards points worth a minimum of 1.25 cents each (see previous post for details about that), this implies that I value the Sapphire Reserve card’s travel protections at at least 2.5 cents per dollar spent on airfare. If I spend $750 per month / $9,000 per year on airfare*, then we can back into how much I value Chase’s travel protections: $9,000 * .025 = $225. Rounded down, that comes to $200.
* With the Sapphire Reserve, you’re covered even if you book award flights as long as you pay taxes and fees with the card. So, the $9,000 per year on flights in my analysis includes the value of award flights.
In total, my new personal valuation of the Sapphire Reserve comes to $540 per year. That’s enough over the card’s annual fee for me to keep the card (especially since I was very conservative in my value estimates). But, it’s not enough to justify paying $75 more per year to get my wife an authorized user card. Instead, she can use my card to pay for travel booked online. And she can use her Citi Premier card when she needs to pay for travel in person (that’s a great option, too, for 3X gas purchases). For dining, she can use her Amex Gold card within the US (4X), and her Citi Premier elsewhere (2X).
Use the spreadsheet I created to estimate how much you value the Sapphire Reserve card, assuming you have the Amex Gold card too.
To use the spreadsheet, create a copy of it and then overwrite the values in columns D and E on the Sapphire Reserve tab with your own value estimates.
Tips for using the spreadsheet effectively
- Be conservative with your estimates. Enter values that you would pay for a subscription for that benefit rather than the amount you expect to save.
- Consider other factors not listed. Most of the benefits of my Sapphire Reserve card are available through other cards, but I love the fact that this single card gives me best in class earnings on travel, best in class travel insurance, and increases the value of my Chase points earned on other cards. There’s something great (to me) about having a single card to turn to for all travel spend.
- Once you identify cards that you know that you’ll keep year after year (such as the Amex Gold card), make sure to consider that when evaluating overlapping benefits on other cards. For example, the Amex Gold card offers 4X for US dining, so you shouldn’t assign any value to the Sapphire Reserve card’s 3X dining benefit unless you dine out a lot outside of the US.
Once you’ve come up with an honest estimate of the card’s value, compare it to the annual fee. If your estimated value is less than the annual fee, consider downgrading it to a cheaper card or to a fee-free card.
I have no doubt that some readers will find that the new Amex Gold Card did indeed kill the Chase Sapphire Reserve, for them. In my case, it’s clear that both cards provide value that exceed their annual fees, so I’ll keep both. That said, I no longer plan to add my wife as an authorized user to my Sapphire Reserve card. The main reason I wanted to do that was so that she would have her own card that earns 3X for dining. Now, with the Amex Gold Card, she gets 4X within the US. And, with the Gold card, authorized users are free.